Where to from here?

Discussion in 'Investment Strategy' started by VDK, 16th Apr, 2021.

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  1. VDK

    VDK Active Member

    Joined:
    13th Feb, 2019
    Posts:
    41
    Location:
    Brisbane
    Hi team,
    After making a house purchase happen mid last year, I am looking to decide on the next 5 year plan. I don't really like our financial situation - it's not terrible but it's not great either.

    Financials Overview:

    PPOR - $800,000; Loan: $712000
    IP1 - $800,000; Loan: $582000

    Total Property Assets: $1.6m, Loans: $1.29m

    All properties are houses in Brisbane.

    • Cash/offset: $20k
    • Business Investment: ~$80k
    • Business Income: ~8k per annum
    • Rent income: ~$4k pa. after all expenses this year. Older property that required lots of maintenance in the last 12 months, might be a lot better next year.
    • Salary: ~$160k pa + super (wife is currently not working and is hoping to work part time in the future)
    • Car loan: $20k at 1.9%pa - needed a car and had no free cash to buy one at the time.

    Current Scenario and Short Term Objective
    • We're in our mid to late 30's, have 2 children in part time daycare with few years until school.
    • IO loan is IO
    • The house we are in right now can use a bit of sprucing up - it's the cheapest property on the street where most houses are closer to $1m.
    • Schooling is a major consideration, currently we're in the catchment and walking distance to a good public primary and a great private secondary school
    • It would be great to have the option to purchase another property, in case the family grows.
    Medium to Longer Term Objective

    By the time we reach say 50ish, we would like to:
    • Be settled in our PPOR
    • Have a decent source of passive income
    • Have the flexibility to perhaps wind back work, think about a career change or whatever else it may be
    • be able to send our kids to private school should we wish to do so
    • want to do the above without jeopardising our retirement and our children's inheritance

    Next steps - ?
    • Pay off car loan?
    Thanks in advance

    PS: Thanks D&J for the format of the post, I stole it as it was so easy to read!
     
  2. The Y-man

    The Y-man Moderator Staff Member

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    Location:
    Melbourne
    What's the interest rate on the bank loans?

    The Y-man
     
  3. The Y-man

    The Y-man Moderator Staff Member

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    I would be worried if it was otherwise!! :D:D:D

    The Y-man
     
    Branden and Do Androids Dream like this.
  4. VDK

    VDK Active Member

    Joined:
    13th Feb, 2019
    Posts:
    41
    Location:
    Brisbane
    PPOR (P&I)
    1: 570k 2.24% fixed till 11/2022
    2: 142k 2.04% fixed till 01/2022

    IP: (IO)
    1: 582k 2.49% fixed for 2 years (I'd have to check when this one expires).
     
  5. Illusivedreams

    Illusivedreams Well-Known Member

    Joined:
    3rd Oct, 2017
    Posts:
    2,454
    Location:
    Sydney
    I like more buffer than what you have for a rainy day.

    so me I would pay down some debt.

    Wife in Pty time work and all all her income used to pay of unproductive debts once don’t PPOR loan.


    although another method

    Is go aggressive


    tidy up properties through sweat equity , revaluation and draw on equity for next investment.

    go again


    can ip have a GF?
     
  6. The Y-man

    The Y-man Moderator Staff Member

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    Posts:
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    Location:
    Melbourne

    Ok just wanted to check in comparison to car loan.

    The Y-man
     
  7. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

    Joined:
    23rd Aug, 2015
    Posts:
    1,546
    Location:
    Bella Vista
    Your car loan is cheap, however still a good ideal to pay of this bad debt first.

    Your rates are also good, and fixed so nothing you can really do there.

    Im more curious why you borrowed 90% against your PPOR, and assuming you paid LMI when you have plenty of equity on your IP, Or are the properties cross collaterised ?
     
  8. thunderstrike888

    thunderstrike888 Well-Known Member

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    Location:
    Sydney
    Where are you getting a car loan at 1.9%?
     
    jaybean likes this.
  9. VDK

    VDK Active Member

    Joined:
    13th Feb, 2019
    Posts:
    41
    Location:
    Brisbane
    VW finance offer
     
  10. Branden

    Branden Well-Known Member Business Member

    Joined:
    12th Aug, 2018
    Posts:
    627
    Location:
    Blacktown, NSW
    If I was you I would just put my head down and start paying off that PPOR loan over the next few years. If your IP has good locality and demand you should see some good growth in the short term. You can then re-evaluate where you are after the market moves in the next couple of years. Unfortunately, a good plan is usually quite boring and simply requires a forward-thinking approach and dedication to achieve. I hope this helps.
     
  11. VDK

    VDK Active Member

    Joined:
    13th Feb, 2019
    Posts:
    41
    Location:
    Brisbane
    Hey, so I thought I'd give a little update on this post. We were very lucky to catch the Brisbane property wave, very thankfull for that.
    Still not exactly sure what that 5 year plan is :)

    Financials Overview:

    PPOR - $950,000; Loan: $700000
    IP1 - $1,150,000; Loan: $582000

    Total Property Assets: $2.1m, Loans: $1.28m

    All properties are houses in Brisbane.
    • Cash/offset: $20k
    • Business Investment: ~$80k
    • Business Income: ~8k per annum
    • Rent income: ~$6-8k pa. after all expenses this year. A bit better then last year, seems to be trending up with rent rises.
    • Salary: ~$163k pa + super (wife is still working out what to do, negotiating a part time position with her old employer)
    • Car loan: Gone, downgraded to cheap runabout and cleared the loan
    The loans on the property are fixed term with 1 year remaining, but with the recent interest rate changes the break costs seem to be zero (I've checked with one bank but not the others).

    My thinking is, might be a good time to consolidate the loans with one bank and lock in a low interest rate for 2-3 years?

    Cheers
     
    Hills123 likes this.
  12. The Y-man

    The Y-man Moderator Staff Member

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    Careful what you do there - you might end up cross-colling and also doing some weird thing that affects tax deductibility etc.

    The Y-man
     
  13. VDK

    VDK Active Member

    Joined:
    13th Feb, 2019
    Posts:
    41
    Location:
    Brisbane
    Yep, all things to consider. I was thinking keeping the loans completely separate, but consolidate to a single bank (currently its between two banks) to hopefully get a better deal and maybe lock in good rates.
     

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